KSS might be a consensus short – but for the wrong reasons. Timing might be less-than certain near-term. But that's also consensus. I'm moving it back up to #2 on my list (of 16 shorts), second only to HBI .
There's more written on the wall than even the bears are considering.
KSS/M Credit. Does ANYONE care about the Macy’s Credit read-through to KSS? VERY KSS bearish.
- Macy’s credit income was down 26% in the quarter reported yesterday.
- It was far worse than even we (ie McLean’s model) expected. Lower sales were in our plan…but we’re seeing lower card usage (proprietary penetration of 47.1% in 4Q vs 47.9% last year), higher charge-offs/delinquencies. The one positive was lower late fees vs last year.
- Here’s what I STILL don’t get. M and KSS are nearly spot-on with credit earnings – both roughly a third of EBIT. Macy’s has a higher quality portfolio than KSS. Yet KSS is trending UP while M is trending DOWN. COF (KSS partner) is also trending bearish. What gives?
- AND KSS is underwriting promos with its tender-agnostic reward plan bc COF won’t go deeper down the FICO spectrum.
- [note: COF 10K out later this week -- should get good detail that KSS does not disclose]. Can someone explain how KSS' auditors allow it to disclose things like UA (at best 0.7% of sales), and not full credit detail ($1.65 in EPS).
- What happens when people realize that it’s cheaper to get a $30 faux-cashmere sweater at Kohl’s with an Amazon Prime card than it is to use the KSS Store Card? (yes, I’m dead serious).
KSS might be a consensus short – but for the wrong reasons. Timing might be less-than certain near-term. But that's also consensus. I'm moving it back up to #2 on my list (of 16 shorts), second only to HBI .
There's more written on the wall than even the bears are considering.
